© Lolade Ososami1 AN OVERVIEW OF COLLECTIVE INVESTMENT VEHICLES UNDER THE NIGERIAN INVESTMENT LAWS Lolade Ososami Abraham & Co.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Governing Laws & Regulation The Investments and Securities Act, 1999 Establishes the Securities and Exchange Commission (SEC), which is the regulatory authority in charge of portfolio investment in Nigeria. SEC Rules Nigerian Stock Exchange Rules & Regulations Companies and Allied Matters Act, 1990

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) COLLECTIVE INVESTMENT An arrangement under which participants pool their contributions for the purpose of sharing the profits or income arising from the management of their money or property solely from the efforts of a third party. (S. 123(2) ISA)

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Collective Investment Vehicles Recognized Under the ISA Investment Company Unit Trust Investment Trust Venture Capital Company Real Estate Investment Coy. Trust for Sale Pension Fund Provident Fund

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Investment Company Must be registered under the CAMA as a private Nigerian company. Membership must not exceed 50 SEC registration is not required. Shares held by members represent a proportionate interest in the ICs portfolio of securities

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …investment company Securities purchased are determined by the ICs investment objective. Investors can participate in the income and assets of the IC at winding up. Fund Manager employed or engaged by the Company must be registered with SEC.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Unit Trust Must be registered under CAMA Owns and manages a diversified portfolio and issues units linked to the value of the portfolio. Its units are redeemable at net-asset value Its units must be listed on the Stock Exchange

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …unit trust Can only invest in securities prescribed by the Trustees Investment Act or approved by SEC Assets are vested in the Trustees Its prospectus must be in the format prescribed by SEC Rules and Schedule 3 of the ISA.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Investment Trust Must be registered under CAMA as a PLC. Its shares must be listed on the Stock Exchange. Its prospectus must be in the prescribed format. It sells its shares like any public company.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …investment trust Its shares are irredeemable Investors can only sell their shares in the stock market at a price determined by demand and supply Investors must pay a brokerage commission at the time of sale and purchase

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Venture Capital Fund/Coy. Company must be certified by the FIRS as a VCC Investment must be in a certified Venture Project The project must fulfill the objectives set out in Decree 89 of 1993

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …venture capital company Provisions of the Trustees Investment Act will apply Company must register with SEC Trustees of other investment schemes can invest in the Company and their investment will be deemed as security

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Real Estate Investment Coy. Usually takes the form of a registered company set up solely to acquire intermediate or long-term interests in real estate or property development. Investors must be shareholders in the company so that they can exercise voting rights in the management of the company.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …real estate investment coy The company can raise funds from the Capital Market through the issuance of securities which must be in form of income certificates that give investors the right to a share of the income from any property acquired by the company or property development project undertaken by the company.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Real Estate Trust (also known as Trust for Sale) A Trust constituted for the sole purpose of acquiring a property on a Trust for Sale for investors. Investor shall be entitled to retain control over their instruments by investing directly in a particular property rather than in a portfolio of investments.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …trust for sale Investors shall acquire units in the Trust through which they shall be entitled to receive periodic distribution of income and participate in any capital appreciation of the property concerned.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Pension Funds Any society, fund or scheme, the assets of which are held under irrevocable trusts and the main objects of which are the provision of non-assignable and non-commutable retirement pensions or annuities for an individual or his dependants after his death.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Pension Funds contd. Its main purpose shall be the provision of pensions for employees on retiring at a specified age; or the accumulation of sums payable to an employee on leaving the service of an employer. The Fund must be constituted under an independent and irrevocable trust.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) …pension fund Membership must be open to all employees At least 50% of funds must be invested in Securities issued by or under the authority of any government in Nigeria and other Capital Market Instruments.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Provident Fund Any society, fund or scheme, not being a pension fund, established under irrevocable trusts or a law in Nigeria or elsewhere the objects of which are the provision of commutable retirement benefits for an individual or his dependants after his death or a group of individuals and their dependants.

'LOLADE OSOSAMI ALL RIGHTS RESERVED (C) Provident funds contd. The retirement benefits are commutable (i.e they can be altered) The total contribution made by the employer is limited to 25% of the employees annual salary.